Forex Tips & Daily Analysis

Economical News

USD

The Dollar lost versus all of the major currencies yesterday. The USD lost 62 points against the EUR and closed at 1.5742. Traders should also note that the USD lost 148 points vs. the GBP, ultimately closing 1.9834. Yesterday, the Crude Oil Inventories was the only news to come out of the US market. This indicator came in lower than expected at -5.9M , however it failed to have a clear effect on the greenback.

Looking further today, three indicators will be published. The Unemployment Claims are forecasted to decline to 397K after being recorded at a surprising high of above 400k last week. The Fed Chairman Bernanke and Treasury Secretary Henry Paulson are also scheduled to testify on financial market regulation before the House of Representatives Committee on Financial Services. After a hawkish speech previously, Bernanke will need to repeat such a performance to help the struggling USD.

The Natural Gas Storage, which is also scheduled for today, is expected to rise and set the figure of 95B as apposed to the last month's figure of 85B. Overall we may expect the USD to appreciate slightly versus its currency pairs.

Traders should note a new response by consumers to the high gasoline prices. Given the currently record high Oil prices, the US consumers decided to avoid spending money on gasoline that is not necessary for their daily lives. Thus a 5 year low of gasoline expenditure developed. This probably will slowly decrease Oil prices which in the long term should affect U.S. dollar prices as well.

As only a few indicators are expected to affect the USD during today's trading session, investors are advised to follow the news of its counterparts.

EUR

The EUR experienced mixed trends versus the major currencies yesterday. The EUR gained 62 points against the USD and closed at 1.5742. However the EUR declined versus the GBP, eventually closing at 0.7964. The German Trade Balance and the French Trade Balance indicators were published at 14.4B and -4.7B respectively. In addition, the European Central Bank President Trichet spoke about economic and monetary developments that helped increase volatility. Overall, yesterday's indicators had a minor effect on the European currency; therefore we should look deeper into the EUR's counterparts for the explanation.

Looking further today, only a few indicators are projected to shed light on the state of the Euro-Zone economy. The French Industrial Production is forecasted to fall from a positive figure to -0.5%. The ECB Bulletin will reveal the statistical data which the European Central Bank Governing Board reviewed when formulating the last Interest Rate decision on the 3rd of July. The Bulletin will also provide detailed analysis of inflation and current economic conditions in the European economic zone. Similar to the French Industrial Production, the Italian Industrial Production is also expected to drop to -0.5%. In addition, the European Central Bank President Trichet, will deliver a speech on the Euro's 10th anniversary conference in Munich.

JPY

The Yen saw bullish trends against all of the major currencies during yesterday's trading session. The JPY gained 77 points against the USD and closed at 106.75. A possible explanation can be found in yesterday's news events. The Machine Tool Orders was the only indicator to decline to -2.7%. However the other two indicators contributed to the strengthening of the JPY. The CPGI, an indicator which measures the change in the price of goods sold by corporations, appreciated to 5.6% and the Japanese Current Account gained 0.13T coming in at 2.03T.

Japan's Pension Fund has lifted its hedge fund investments 6 fold in less than a year as part of the efforts to boost returns from a wider range of holdings. The fund has put $2.8 billion into hedge funds and aims to increase that to about 4% of its total assets. Traders should note that if a small sum of this money enters the forex market it will probably cause sharp increase in volatility in the market.

Today there are no news expected to come out from Japan. Thus investors are advised to follow news releases from the Yen's counterparts.

Technical Analysis

EUR/USD

The pair has been going through a choppy sessions with mixed trends for the past 7 days. The Bollinger Bands on the 4 hour chart are tightening, suggesting that a bearish breach is impending. A fresh bearish cross on the Slow Stochastic also supports that notion. Going short with tight stops might be a good strategy today.

GBP/USD

The 4 hour chart shows that the cable is in the midst of a strong upward trend, as the pair gained over 100 pips in one day. The Slow Stochastic is showing a bullish cross on the daily chart, indicating that the bullish tend may further continue. Going long appears to be preferable.

USD/JPY

The pair is in the middle of a strong bearish corrective move which appears to have more steam in it. All oscillators on both the 4 hours chart and the daily chart are indicating a further bearish move. The next target price of 106.50 appears to be valid.

USD/CHF

The typical range trading on the daily chart continues. There is a bearish cross on the daily chart's Slow Stochastic; however, all other indicators are floating in neutral territory. Good strategy might be to wait for a clearer signal before entering the market on this pair.

Wild Card

Gold

The bearish corrective move appears to be over, as the gold is resuming its upward trend. All oscillators are pointing up, indicating the bullish momentum is very strong. This is a great opportunity for forex traders to join in a very promising trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5810	1.9860	108.00	1.0400	0.9680	0.8050
	1.5790	1.9840	107.80	1.0380	0.9660	0.8030
	1.5760	1.9810	107.50	1.0350	0.9630	0.8000
Support	1.5690	1.9720	106.80	1.0270	0.9560	0.7930
	1.5660	1.9690	106.50	1.0240	0.9530	0.7900
	1.5640	1.9670	106.30	1.0220	0.9510	0.7880

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-10	00:00	GBP	MPC Rate Statement		*	*
		MPC Rate Statement Usual Effect More hawkish than expected = Good for currency; Frequency Monthly; FF Notes This is a "Tentative" event because the statement is not issued if the rate doesn't change (except under extreme conditions). If the statement is not issued this event will be removed from the calendar immediately following the release. If issued, the Tentative mark will be removed; Acronyms Bank of England (BOE), Monetary Policy Committee (MPC); Why Traders Care It's one of primary methods the MPC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates, commentary about the economic conditions that influenced their vote, and most importantly, clues on the outcome of future votes;
2008-07-10	01:30	AUD	Employment Change		-25.6K	10.2K
		Employment Change Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises
2008-07-10	01:30	AUD	Unemployment Rate		4.3%	4.3%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2008-07-10	06:45	EUR	French Industrial Production	m/m	1.5%	-0.5%
		French Industrial Production Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income.
2008-07-10	08:00	EUR	Italian Industrial Production	m/m	0.4%	-0.5%
		Italian Industrial Production Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income.
2008-07-10	08:00	EUR	ECB Bulletin		*	*
		ECB Bulletin Reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision. The report also provides detailed analysis of inflation and current economic conditions.
2008-07-10	08:00	GBP	Halifax House Price Index	m/m	-2.4%	-1.0%
		Halifax House Price Index Measures the monthly change in the average sale price of homes finances by the Halifax Bank of Scotland (HBOS). Halifax is the UK's largest mortgage lender uses internal mortgage lending figures to produce the index.
2008-07-10	11:00	GBP	Official Bank Rate		5.00%	5.00%
		Official Bank Rate Measures Interest rate at which banks lend balances held at the BOE to other banks; Usual Effect Actual > Forecast = Good for currency; Frequency Monthly; FF Notes When there is a change in rates the MPC will also issue a statement. Rate shifts are usually priced in the market and thus overshadowed by the MPC statement which is focused on the future; Acronyms Bank of England (BOE), Monetary Policy Committee (MPC); Also Called Interest Rates, BOE Rate; Why Traders Care Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future; Derived Via The 9 members of the MPC vote on where to set the rate. The individual votes are published 2 weeks later in the MPC Meeting Minutes;
2008-07-10	12:30	USD	Unemployment Claims		404K	397K
		Unemployment Claims Measures the number of individuals who filed for unemployment insurance for the first time during the past week. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP. This weekly indicator produces very timely data, but traders generally view unemployment as a lagging indicator that gives little indication of the economy’s future performance.
2008-07-10	14:00	USD	Fed Chairman Bernanke Testifies		*	*
		Fed Chairman Bernanke Testifies The testimony usually comes in two parts: first he reads a prepared statement (a text version is made available on the Fed's website at the start), then the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility. As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
2008-07-10	14:35	USD	Natural Gas Storage		85B	95B
		Natural Gas Storage Measures Change in the number of cubic feet of natural gas held in underground storage during the past week; Usual Effect No clear effect, there are both inflationary and growth implications; Frequency Released weekly, 5 days after the week ends; FF Notes While this is a US indicator, it most affects the loonie due to Canada's massive oil sands; Acronyms Energy Information Administration (EIA); Also Called Nat Gas Stocks, Nat Gas Inventories; Why Traders Care It influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods;
2008-07-10	17:45	EUR	ECB President Trichet Speaks		*	*
		ECB President Trichet Speaks European Central Bank (ECB) President Jean-Claude Trichet will speak at the 36th Economics Conference organized by Oesterreichische Nationalbank, in Austria. As head of the central bank's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.